By Tomas Carbonell

The U.S. Environmental Protection Agency (EPA) has embarked on a vital effort — accompanied by extensive outreach to states, power companies, environmental organizations, and other stakeholders, including you — to establish the nation’s first limits on carbon pollution from fossil fuel-fired power plants.

EPA was directed to take this critical step for public health and the environment in the President’s Climate Action Plan that was released last summer. Protective and well-designed Carbon Pollution Standards will provide important benefits for all Americans.

Fossil fuel-fired power plants emit 40 percent of the nation’s carbon pollution, as well as significant amounts of mercury, acid gases, and pollutants that contribute to smog and particulates.

That’s why it is critical to get these rules right, and to mobilize common sense solutions proven in red and blue states alike in reducing carbon pollution from the power sector.

Of all the available ways to reduce carbon pollution, one of the most cost-effective and time-tested approaches is to reduce demand for fossil fuel electricity through end-use energy efficiency (EE).

EE measures encompass countless improvements, large and small, in the ways we use electricity in our offices, factories, and homes. All of those improvements can add up to big savings, not only in our monthly energy bills but in the total amount of fossil generation needed to power our society.

Dozens of states and power companies are already investing heavily in EE, and have built up decades of experience in measuring and verifying the many benefits it can yield for consumers and for the environment.

Incredible Potential to Cut Emissions and Save Money by Reducing Wasted Electricity

States and power companies around the country have been implementing EE programs for decades, and have increased their efforts in recent years as experience with the benefits of EE has grown.

26 states in diverse regions of the country, from Arizona and Colorado in the Southwest to industrial Midwest states like Ohio and Illinois, now have “energy efficiency resource standards” or similar policies that require utilities to achieve a certain amount of energy savings each year.

State spending on EE programs increased by 28 percent between 2010 and 2012.

As EE policies and investments have grown, so have energy savings.

In 2011, state EE programs saved a total of 22.9 million megawatt-hours — roughly equivalent to the entire annual output of seven 500 megawatt coal-fired power plants.

These savings increased 22 percent since 2010 and, importantly, count only those savings achieved in the first year these EE measures are in place.

Because most EE measures continue to yield energy savings years or even decades after they are installed, the cumulative savings from these state EE programs are much larger.

A recent study by the American Council for an Energy Efficient Economy found that EE programs and policies are a key reason why residential and commercial electricity demand has remained stable since 2007.

As impressive as these developments are, they only scratch the surface of what could be achieved if we were to fully unlock the potential for EE to save energy and reduce emissions.

An exhaustive 2009 analysis by McKinsey & Company, for example, found that rigorous investment in cost-effective EE could reduce the country’s total energy consumption by 23 percent in 2020.

Energy savings on this scale would yield massive emission reductions — about 700 million metric tons of carbon dioxidein 2020 alone (more than 30 percent of power sector emissions today) – and at a cost per kilowatt-hour saved that is about 85 percent less than the average retail price of electricity.

The report also estimated that realizing these energy savings would create about 600,000 to 900,000 jobs through 2020.

Other national and regional studies have similarly found that EE represents a tremendous “win-win” opportunity for our climate, for families and consumers, and for the economy as a whole.

In 2012, for example, the Southwest Energy Efficiency Project (SWEEP) issued a report focusing on the potential benefits of scaling-up EE programs in six Southwestern states (Arizona, Colorado, Nevada, New Mexico, Utah, and Wyoming).

Based on the track record of “best practice” EE programs around the country, SWEEP found that these six states could reduce their electricity demand in 2020 by more than 20 percent while achieving net benefits of about $20 billion – amounting to $2,650 for every household in the region (largely in the form of lower energy bills).

Investments in EE at this scale would also create about 30,000 additional jobs in the region by 2020, and increase wages and salaries by more than $1 billion.

At the same time, these EE measures would reduce carbon pollution by more than 30 million metric tons in 2020, (a 16% reduction relative to expected emissions in 2020), while also reducing thousands of tons of pollutants that contribute to smog, acid rain, and harmful particulate pollution.

EE and the Carbon Pollution Standards

If you’ve read my colleague Megan Ceronsky’s earlier blog, you’ve already heard about section 111(d) of the Clean Air Act.

That section provides bedrock authority for EPA to issue Carbon Pollution Standards for existing power plants.  It also provides a broad, flexible framework for states and companies to deploy EE and other flexible approaches to reducing carbon pollution from the power sector.

Under section 111(d), EPA and the states will work together to reduce emissions from existing power plants.  EPA will issue “emission guidelines” that identify the “best system of emission reduction” for carbon pollution from existing power plants and the emission reductions achievable using that system.  The states then have the responsibility to develop plans that implement standards consistent with those guidelines.

Just a few weeks ago, Kate Konschnik, Policy Director of the Environmental Law Program at Harvard Law School, released a report that makes a strong legal case for considering EE as part of the “best system of emission reduction” that underpins EPA’s emission guidelines.

As Konschnik argues, the Clean Air Act grants EPA broad authority to consider flexible measures such as EE as a part of the best system of emission reduction for carbon pollution:

[B]ecause it is adequately demonstrated and cost-effective, imposes minimal environmental costs, and reduces overall energy requirements.

Moreover, as Konschnik points out, methods for quantifying and verifying EE-related energy savings and emission reductions are well-developed.

Over the last two decades, at least 35 states and two regional transmission organizations have adopted protocols for measuring and verifying energy savings from EE projects. These savings are now widely used as the basis for critical regulatory proceedings and market functions, including establishing utility rates, compensating EE in regional capacity markets, and carrying out long-term regional resource planning.

In addition, EPA has already allowed several states to credit emission reductions resulting from EE and renewable energy towards compliance with national air quality standards. EPA has also issued detailed guidance to the states on analytical approaches and tools that could be used for future programs.

Ensuring Smooth Implementation of EE in the Carbon Pollution Standards

Under traditional emissions trading programs such as the Regional Greenhouse Gas Initiative (RGGI) or California’s cap-and-trade system, the emission reduction benefits of EE are readily observed as emissions from power plants drop.

Under these programs, no separate system for tracking emission reductions from EE is necessary.  As a recent report by RGGI confirms, these programs are also funding significant investments in EE programs that have already helped 815,000 families.

However, some states may choose to directly incentivize EE through policies that credit individual projects and programs for their impacts on energy savings and emissions.

For this reason, EDF has worked with experts in the field to study how measurement and verification for such EE crediting systems could work in a way that is environmentally rigorous and administratively streamlined, and that builds on extensive state and regional experience with existing EE programs.

We recently submitted a report to EPA, developed by the Analysis Group, that lays out one possible framework for ensuring both desirable outcomes:

• Rigorous measurement and verification of EE projects, and
• Consistent methods for determining emission reductions that are attributable to EE projects

This framework recognizes the diverse approaches to measurement and verification of EE that are in use around the country. But in developing this framework, we were also struck by the significant progress that a number of organizations have made in developing best practices and consensus protocols for evaluating EE projects.

One example is the Department of Energy’s Uniform Methods Project (UMP), which has organized a multi-stakeholder process to develop rigorous yet streamlined measurement and verification protocols for different types of EE projects.

To date, UMP has released protocols addressing seven major EE project types and five “cross-cutting” evaluation issues. Eight more protocols are expected to be finalized in the coming months.

Other notable efforts to develop and encourage best practices in the field include:

• The International Performance Measurement and Verification Protocol, which lays out four broadly accepted approaches to measurement and verification of EE projects and has been adopted or recognized by various states and regional transmission organizations
• Regional technical initiatives such as the Northeast Energy Efficiency Partnership and Pacific Northwest Regional Technical Forum, which work to develop regional databases on the performance of EE programs
• The evaluation guides and studies produced by the State and Local Energy Efficiency Action Network, which brings together diverse stakeholders to promote timely, cost-effective, and accurate measurement and verification practices

EE: Ready for Prime Time

EE represents a historic opportunity to achieve extensive reductions in emissions of carbon pollution and other power sector pollutants that directly harm public health and the environment.

In many cases, EE measures will actually save families and businesses money over time and help strengthen the economy.

Decades of state and utility experience in designing and implementing EE programs have demonstrated that the benefits of EE are real, and that the policies and tools needed to incentivize EE and measure its effects are available.

EPA should fully mobilize the potential of EE by exercising its authority to consider EE in the design of the Carbon Pollution Standards, and by providing guidance to the states to facilitate the inclusion of EE in state plans implementing those standards.

This commentary originally appeared on our Climate 411 blog.

By Ramon Alvarez, Ph.D.

Source: Dallas Observer

A new study accepted for publication in Environmental Science & Technology takes a close look at the amount of certain air pollutants in the Barnett Shale, a booming oil and gas region in North Texas. Using public monitoring data from 2010-2011, researchers from the University of Texas at Austin compared air pollution levels measured at a monitor surrounded by oil and gas operations to the levels that would be expected based on available emission estimates. The result brings to light that the emissions inventory from the Texas Commission on Environmental Quality (TCEQ) for the Barnett Shale does not add up to the observations.

There are numerous air pollutants that can be emitted by oil and natural gas development. Depending on the local composition of the produced gas, emissions can often include volatile organic compounds (VOC, such as propane, butane, pentane, etc.) that contribute to the formation of ground-level ozone (also known as smog), and toxic air pollutants like benzene and hexane that are directly hazardous to human health. Methane, the primary ingredient in natural gas and a greenhouse gas catching lots of attention these days, is another powerful pollutant associated with these operations. Unlike the pollutants listed above, methane directly affects the health of our climate rather than human health. Fortunately, available technologies designed to capture methane are also effective in reducing these other pollutants. However, methane controls alone may not ensure that local air quality concerns are addressed – these require special attention.

The paper, "Atmospheric hydrocarbon emissions and concentrations in the Barnett Shale natural gas production region," was written by UT’s Daniel Zavala-Araiza, Dave Sullivan and David Allen. Environmental Defense Fund sponsored this research; it is unrelated to another study that quantified methane emissions from U.S. natural gas production sites, which was co-sponsored by EDF and led by the same principal investigator, Dr. Allen. For me, this new paper offers two important insights on concerns over air pollution from the oil and gas industry.

TCEQ's emission estimates are too low

First, the best available estimate of VOC emissions from Barnett Shale operations appears to underestimate actual emissions. This finding is consistent with the growing number of projects helping us understand the amount of emissions and sources contributing to ambient air pollution levels.

In their paper, Zavala-Araiza et al. compared hourly air pollution data, captured using monitors in real time, to the levels predicted by their analysis of TCEQ’s Barnett Shale Special Inventory for 2009. They found that actual levels of VOC in the air are higher than the levels predicted by their inventory analysis — by 25 to 100 percent. The difference varies depending on which of the two monitors is used to represent background conditions (i.e., in the absence of natural gas development). The researchers found better agreement by increasing the inventory emissions from pneumatic devices, chemical injection pumps, and equipment leaks using the results from the separate UT production study. This is a significant adjustment, as it increases the total amount of VOC emitted in the region by a third. However, even with this adjustment the observed concentrations were still 60 percent higher than predicted when using one of the two background monitors (there was no bias when using the other background monitor).

Further work is needed to evaluate the completeness of the inventory used by the University of Texas team.  Specifically, it is unclear how the team accounted for emissions that TCEQ says are not included in the Barnett Shale Special Inventory: 1) oil and gas sources in the same geographic area that produce from formations other than the Barnett, and 2) emissions from typically larger facilities that did not have to report to the special inventory because they report to a separate "point source" inventory.

A second key finding is that episodic emissions like those occurring from liquid unloadings, when a well is cleared of liquids inhibiting production, do not appear to have a significant influence on hourly air pollution readings; the hourly variability in pollution levels can be largely explained by meteorological effects. This was surprising, as the project initially set out to quantify the influence of such events. But great uncertainty underlies this finding if extrapolated to other areas without empirical data.

More air monitors needed

The Zavala et al. paper shows the kinds of insights that can be gained by investing in air monitoring. A clear recommendation in my mind is that the TCEQ should place more monitors in other major oil and gas producing regions of Texas, including the Eagle Ford. While the state of Texas has developed a commendable network of air monitors in the Barnett Shale, this is not true in other oil and gas plays. Installing monitoring networks early in the development of oil and gas operations would help isolate their air quality impact.

This commentary originally appeared on our Texas Clean Air Matters blog.

By EDF Blogs

By: Matt Golden, Senior Energy Finance Consultant

 

Source: LA Better Buildings Challenge

Environmental Defense Fund’s Investor Confidence ProjectSM (ICP) is pleased to announce a partnership with the Los Angeles Better Buildings Challenge to help develop a more robust marketplace for energy efficiency retrofits in the city. Los Angeles has set a goal of achieving 20% energy savings across 30 million square feet of existing buildings by 2020 as part of the Better Buildings Challenge, a national leadership initiative sponsored by the U.S. Department of Energy. If achieved, it is estimated that this 20% reduction in energy costs will create over 7,000 high-quality local jobs, and avert annual carbon emissions equivalent to taking more than 18,000 cars off the road.

The LA Better Buildings Challenge will be promoting the ICP Protocols through its network of building owners and industry stakeholders to help bring even greater transparency and accountability to the energy efficiency market by introducing a system of standardization in the way commercial building retrofits are developed, funded, and managed. The ICP framework assembles best practices and existing technical standards into a set of protocols that define a clear roadmap for developing projects, determining savings estimates, and documenting and verifying results.

Source: LA Better Buildings Challenge

David Hodgins, Executive Director of the LA Better Buildings Challenge, describes how the partnership with ICP will help the project meet its goal. “The mission of the LA Better Buildings Challenge is to support our partners in achieving a minimum of 20% savings by 2020, and to get there we need to have a clear path. We are excited to partner with ICP, which offers our partners a best-practice approach to developing, underwriting, and measuring the impact of their resource efficiency projects,” he said.

With the goal of driving at least $25 million in total investment, the LA Better Buildings Challenge has developed a directory of capital providers to facilitate access to project funding options. Using the ICP protocols, EDF will work with the LA Better Buildings Challenge to increase deal flow and expand its pool of investors putting dollars to work in Los Angeles’ economy.

The ICP Protocols are designed to increase confidence in energy and financial savings among building owners, project developers, and investors, making it easier to overcome the many barriers that make it hard for projects to move from a good idea to construction. The ICP team is working with LA Better Buildings Challenge to connect local companies, building owners, and projects to local investors and our national network of Project Allies. This service will provide them with a range of relevant options, from energy service agreements and debt and equity financing, to insurance products and a diversity of software tools.

Adopting the ICP framework will save LA Better Building Challenge partners from the expensive and time-consuming process of creating and maintaining unique technical project requirements that would otherwise result in a patchwork of program requirements across California and the county, increasing transaction costs for project developers, building owners, and investors alike.

The LA Better Buildings Challenge has been extremely active in engaging the public and private sectors, as well as building owners in order to meet the target goal. Achieving a reduction of 20% in energy savings will significantly reduce operating costs for building owners (freeing up capital for more productive uses), enhance tenant comfort and productivity, and boost market competitiveness.

The LA Better Building Challenge is a great example of how the Investor Confidence Project can support the ongoing growth of an established energy efficiency program and enable deeper investments in energy efficiency. We look forward to working closely with the LA Better Buildings Challenge and a range of other program partners as we help establish a consistent national marketplace for energy efficiency investment.

By EDF Blogs

Source: National Retail Federation Flickr

Thousands of clean energy conferences are held every year across the United States. A quick Google search revealed over 1.5 million results for 2014 alone. That’s why, starting this month, in an effort to save our readers time, the Energy Exchange will be endeavoring to round up a monthly list of some of the top clean energy conferences around the country. Our list includes conferences at which experts from the EDF Clean Energy Program will be speaking, plus additional events that we think our readers may benefit from marking on their calendars.

Top clean energy conferences featuring EDF experts in April:

April 2-4: Wall St. Journal ECO:nomics, Santa Barbara, CA
Speaker: Fred Krupp, President

• Each year, top CEOs and investors, pioneering entrepreneurs, environmental experts, and policy makers convene at ECO:nomics to discuss and debate the most critical issues facing leaders who are driving change at the intersection of business and the environment. Experts from a diverse range of industries will debunk myths and uncover new opportunities through dynamic interviews led by senior editors from The Wall Street Journal. Topics range from America’s game-changing natural gas boom to China’s globally significant energy appetite to the range of potential power sources of tomorrow.

April 7-9: Bloomberg New Energy Finance Summit 2014, New York, NY
Speaker: Victoria Mills, Managing Director of EDF Climate Corps

• The NEF Summit is a forum at the nexus of energy markets, industry, finance and policy. Over three days, the Summit will focus on specific themes, such as technology in energy and the state of innovation in areas like solar and wind energy, and feature the world’s pioneering leaders on each topic. The highly topical content is delivered through engaging panel discussions, informative breakout sessions and provoking keynote addresses.

April 9: CleanTech Future Conference III, Phoenix, AZ
Speaker: Jamie Fine, Senior Economist

• CleanTech Future Conference III brings together the top innovators, corporations, government agencies, investors, and thought leaders, in a conference designed as a platform specifically to present and improve upon the plan for the transition to a sustainable energy future and the plethora of opportunities that will emerge as we do so.  Topics will center around “the state of innovation” for clean technologies including renewables, energy storage, smart grid, distributed generation, biofuels, micro grids, small scale nuclear, and much more. Register here.

Apr 15-16: 15th PLMA Spring Conference, Denver, CO
Speaker: Jamie Fine, Senior Economist

• The PLMA Conference will provide real-world insight from market practitioners, technology firms, and energy utilities/marketers active in the demand response marketplace. Energy utility/marketer professionals, regulatory, and business professionals responsible for demand response, as well as industry advisors, will discuss current topics affecting DR programs in various sectors such as public power and competitive energy providers. Register here.

Apr 24-25: SURFA: Financial Forum of the Society of Utility and Regulatory Financial Analysts, Indianapolis, IN
Speaker: Diane Munns, Director of Clean Energy Collaboration

• The SURFA Forum will explore "The Regulatory Compact" from many facets. The Forum will have representatives from each of the major rating agencies, equity analysts, a treasurer from some of the largest gas, electric and water utilities in the country, and representatives from the regulatory community. The Forum will provide a better understanding of current cost of capital issues affecting the regulated utility industry for attorneys, utility company staffs, regulatory commissioners, and staff, as well as consumer advocate agencies. Register here.

Other top clean energy conferences across the U.S. in April:

April 1-3: Power Industry Transformation Summit, San Francisco, CA

• The Power Industry Transformation Summit will bring together regulators, utilities, energy consumers, and the distributed generation, energy storage, micogrid, and smart grid communities to explore new opportunities and develop solutions to challenges facing the industry. Register here.

April 3-4: Sixth Annual Green Technologies Conference, Corpus Christi, TX

• The Institute of Electrical and Electronics Engineers (IEEE) Green Technologies Conference is an exciting conference to share and learn cutting-edge information on green technologies. Stimulating talks on a diverse list of topics, a panel discussion on wind integration technologies, and a half-day workshop on International Association of Electrical Inspectors’s Photovoltaic System Requirements are part of this technical conference. Register here.

April 8-9: Military Smart Grids & Microgrids Symposium, Washington, DC

• This program unites the key planners and technical experts who are leading the way in developing smart and microgrid systems. Emerging government and military spending on “smartgrid” technologies will include advanced metering, transmission efficiencies, smart switches, enhanced demand response capabilities, distribution automation, energy management systems, plus many other technologies. Register here.

April 9-11: Utility Analytics Summit, Durham, NC

• This annual strategic conference addresses the unique issues and complexities utility professionals encounter from grid analytics, customer analytics, and analytics infrastructure initiatives. Hear from thought-provoking speakers and gain insights on the changes for today’s and tomorrow’s utilities, and how analytics can help utilities adapt to those changes, and even embrace them. Register here.

Apr 14-16: GTM Solar Summit 2014, Phoenix, AZ

• Solar Summit is Greentech Media’s flagship annual solar conference that focuses on global market trends, relevant technologies, and project finance. With sessions on everything from Latin American market dynamics to  PV balance-of-system innovations, Solar Summit attracts high-level decision makers from all areas of the industry. Register here.

Apr 14-17: 2014 IEEE PES Transmission & Distribution Conference & Exposition: The Next Fifty, Chicago, IL

• This event, sponsored by the Institute of Electrical and Electronics Engineers Power Engineering Society Transmission & Distribution Organizing Committee, the City of Chicago, and ComEd, will showcase the technologies, products, companies, and minds that will lead our industry through the next fifty years – and beyond. Register here.

Apr 16: SmartGrid Technology 2020, Los Angeles, CA

• University of California, Los Angeles Smart Grid Energy Research Center (UCLA SMERC) will host a summit to discuss advanced technology demonstrations planning from now until 2020, as well as to present the goals and processes for their existing Industry Partners Program. At this summit, UCLA SMERC will present a framework for a top-level architecture of their smart grid development efforts. Register here.

Apr 22-23: 2014 NC Annual Sustainable Energy Conference, Raleigh, NC

• Hosted by the State Energy Program of the NC Department of Environment and Natural Resources’ Division of Energy, Mineral and Land Resources, this conference is an essential gathering for networking, professional enrichment, and that spark of inspiration. A catalyst of the energy economy in North Carolina, speakers, panelists, exhibitors, and sponsors engage in this two day event covering themes like Energy Policy, Infrastructure and resource exploration, energy finance and jobs, utility savings initiative, smart grid, and renewables. Register here.

If there are any conferences missing from this list, please let us know in the comments section of this blog post. And if you’d like to ensure you get this email in your inbox every month, be sure to subscribe to the Energy Exchange blog via the sign-up box in the left-hand side of the screen.

By Marita Mirzatuny

Source: North America Power Partners

The Texas Public Utilities Commission (PUC) has, yet again, kicked the can down the road on securing reliable energy to power the state’s growing population. The PUC, the state agency charged with managing electricity rates, meets to securely plan for the future, yet they continue to delay planning meetings. This will benefit no one in the short or long-run. To secure reliable power and safeguard against threats of blackouts, the PUC needs to keep pace with the times and leverage technologies that require little to no water, generate negligible carbon emissions, and can respond to the call for electricity.

Last week, the PUC decided to postpone indefinitely an important meeting, originally scheduled for May, to discuss Texas’ recent blackout scares. The PUC has been in a heated debate over Texas’ electricity market structure, and in the midst of backlash from stakeholders, they have decided to push the decision onto the Legislature in 2015. This is not necessarily in the best interest of the state. Texans were asked to conserve energy several times this winter after colder temperatures forced heating units to ramp up. This request to turn down thermostats for threat of rolling blackouts came at the same time the state power grid operator assured Texans that reliability is on the upswing. But it’s time Texas faces the facts.

The state’s current electricity market is too reliant on inefficient, fossil-fueled power plants, which failed repeatedly this winter to meet the electricity needs of Texas’ growing economy.

More power plants is not the answer

Earlier this year, the Brattle Group released its latest analysis of Texas’ electricity market, measuring the tradeoffs between the cost of building more power plants and the cost of increased blackouts. As we have highlighted before, the debate at the PUC centers on whether the state should keep the status-quo, an energy-only market, or switch to a capacity market, which would provide power plants and demand response companies with a premium capacity payment.  Simply paying for energy in the form of “capacity payments” would be similar to insurance payments, meaning Texans would pay power plants to exist in hopes of less risk of blackouts. Yet a key conclusion from the report reiterates what many consumer advocates have said all along: paying power companies to build extra power plants as a solution for managing the state’s growing population and increasingly frequent extreme weather events is not the most cost-effective solution for Texans. This is wasteful of taxpayer’s money and does nothing to curb Texas’ reliance on fossil fuels.

So what is the most cost-effective solution?

The overall cheapest option for Texans is to keep the market the way it is, according to Brattle. Texas needs flexible, cost-effective resources like demand response to reduce the risk of rolling blackouts without increasing costs for consumers. Flexible technologies – like energy efficiency, renewable energy, and demand response – can respond quickly in times of need, require little to no water, improve air quality, and provide stability to the power grid. This is the type of performance worth investing in.

Demand response doesn’t just save money for consumers and help keep the grid stable, it’s good for utilities and power companies, too. By incenting customers to use less power during peak demand, when electricity prices are at their highest, utilities and power providers can avoid buying costly, extra power. For instance, when air conditioning demand peaks during the hottest hours of the year, Texas’ utilities would pay customers to voluntarily reduce energy use, thereby offsetting the need to ramp up an out-of-use (and expensive) power plant. Only customers that have volunteered to would see their energy use lower, unlike a blackout scenario where everyone would be affected.

Whatever changes state regulators decide on will have a lasting effect on Texans for years to come. And relying on the old mentality, “if it ain’t broke, don’t fix it,” is not good enough. Texas already has over six million smart meters. It’s time to finish the smart grid investment we’ve already started and adopt more customer-facing smart grid technologies, like demand response. This will reduce our reliance on fossil-fuel power plants, empower consumers, and increase reliability. State lawmakers should enact rules to prioritize demand response, so that Texans can enjoy both affordable electricity and a reliable electric grid—without increasing pollution.

This commentary originally appeared on our Texas Clean Air Matters blog.

By Brad Copithorne

Source: eProGuide

In 2010, I began working on financial policy at EDF. Our objective was to implement policies that would allow private sector companies to profitably deliver financing solutions to residential and commercial property owners footing the upfront cost of money-saving energy efficiency and clean distributed generation (such as rooftop solar) projects. While the residential solar market was already gaining steam at the time, most of the other markets had very limited momentum. But after attending the clean energy finance conference that EDF co-hosted yesterday with Citi, energy efficiency solutions provider Elevate Energy, and law firm Wilson Sonsini Goodrich & Rosati, it appears that the market for financing clean energy projects is beginning to accelerate rapidly.

The agenda featured 12 private companies from the clean energy sector (Kilowatt Financial, Clean Power Finance, Renovate America, AFC First Financial Corp., Renewable Funding, Clean Fund, Joule Assets, Noesis Energy, SCIEnergy, Metrus Energy, Hannon Armstrong, and Honest Buildings), plus a few more in the audience, that are executing a wide range of transactions using Property Assessed Clean Energy (PACE), On-Bill Repayment, Energy Services Agreements (ESAs), and many other innovative techniques to fund the transition to a low-carbon economy.

There was also a lot of buzz about green banks, pools of funding managed through private-public partnerships to finance clean energy projects. Connecticut’s Clean Energy Finance and Investment Authority, which is re-branding itself as the more straightforward Connecticut Green Bank, outlined several innovative transactions that it has executed. The New York Green Bank, which recently commenced operations, also discussed their plans for growing the market. Renewable Funding’s President and CEO Cisco DeVries, who invented the concept of PACE, discussed how Hawaii’s GEMS program, the state’s version of a green bank, was planning to bring the cost-saving benefits of clean energy investments to Hawaii’s renters, small businesses, and individuals with weaker credit profiles.

Richard Kauffman, Chairman of Energy and Finance for the Cuomo administration and Chairman of New York State Energy Research and Development Authority (NYSERDA), gave the opening keynote and discussed his plans to increase clean energy investments and improve electric grid resiliency in New York. Marc Ferzan, Executive Director of the Governor’s Office of Recovery and Rebuilding, gave the lunchtime keynote on New Jersey’s plan to create the Energy Resilience Bank. He noted that this project will use many of the same techniques as the green banks but will be focused on financing microgrids, smaller versions of the main electricity grid that leverage decentralized, local, clean power sources such as solar and wind. This investment will ensure that critical public infrastructure and facilities can continue operating in the event of central grid outages. Finally, Matt Golden, EDF’s Senior Consultant, updated the group on the strong market acceptance of the Investor Confidence Project, EDF’s effort to bring transparency and accountability to the energy efficiency market by introducing a system of standardization for how financial and energy savings in retrofit projects are measured and predicted.

The conference, the third to be co-hosted annually with Citi, saw great attendance with about 240 guests. I hope we can bring the same team together again next year and look forward to seeing how the exciting, nascent clean energy finance market develops.

By EDF Blogs

By: Lauren Faber, West Coast Political Director

This is the first in a series of posts about leading women in the power, environmental science, advocacy, policy, and business sectors.

Pull back the curtain on climate leadership, and you’ll see women in power. From the author of the country’s leading clean car standards, to the top administrator of the most ambitious climate policy in the nation (California’s AB32), to the scientists and entrepreneurs developing and deploying the advanced technologies driving the nation’s low-carbon economy, women are taking charge of the clean energy sector like never before.

Women have always been on the frontlines of our country’s toughest environmental challenges — including Rachel Carson, who galvanized the country with her exposé of pesticides in Silent Spring, and Hazel Johnson, the ‘Mother of the Environmental Justice Movement,’ who fought against toxic dumping in her own Southeast Chicago community.

But women have not always dominated the energy sector. 

Throughout the Industrial Revolution, the story of energy has traditionally been written by innovative men like Thomas Edison and George Mitchell, who invented and invested in the technologies and companies that made oil, coal, and natural gas the dominant fuels of the 20th century. Today, women are rewriting the history books, spearheading a new era of leadership in the clean energy economy.

One might argue that women’s rise in the clean energy sector shares similarities with the industry’s own evolution. By proving competitive in the marketplace, clean energy over the last few decades has been successfully digging out of the pigeonhole that it is niche, small-scale, and, well, the underdog. Bucking the status quo, women are beginning to penetrate clean-energy industries at a growing rate—creating start-ups, climbing the ranks in large cleantech companies, and investing in the technologies of the future. Renewable energy has been the fastest growing segment of the power industry at the same time that women-owned businesses are growing at twice the national average, and we are seeing these trends converge.

Yet, female leadership extends far beyond the boardroom. Women are also championing forward-thinking climate and energy policies as elected leaders, making critical technological breakthroughs in the labs and hitting the pavement to rally their communities in demanding clean air and smart, livable cities.

Curbing climate change and transitioning to a clean energy economy is about more than just reducing carbon emissions; it’s about investing in a new and more vibrant economic future for us all. In honor of Women’s History Month, I am embarking on a journey to explore Women in Power, recognizing some of today’s bold female leaders ushering in a prosperous, low-carbon economy and shattering the glass ceiling on the way. Stay tuned.

This commentary originally appeared on our EDF Voices blog.

By Marita Mirzatuny

Elon Musk, Tesla CEO, speaking to Texas Legislature in 2013. Source: Texas Public Radio.

Disruptive technologies tend to follow a certain trajectory. First, they are outliers, often ignored, and typically on the cusp of never entering the market. But, for the successful ones, a tipping point is ultimately reached, after which the technology goes viral and changes the status quo it was designed to replace. In the new energy revolution, Tesla is one such company that has surpassed the tipping point and threatens to change the way we produce, distribute, and consume electricity.

It isn't just Tesla's sleek and beautiful electric vehicles that will be key to disrupting the status quo. At a current price point of around $80,000, most people en masse won’t be able to afford a Tesla, even though the company has plans to develop more affordable models. But what makes Tesla unique, besides the strange genius of CEO Elon Musk, is the potential diversification of its offerings, highlighted recently by the company's announcement to build the GigaFactory, a $5-billion battery factory that will employ 6,500 workers.

Set to open in about three years, the new GigaFactory will be large enough to manufacture more lithium-ion batteries than the entire industry produces now, and due to its sheer scale, is expected to reduce the cost of batteries by almost one-third.

Tesla batteries and renewables

Tesla’s move to build the largest battery factory in the world is significant for the electricity market – and not solely for the large-scale adoption of electric vehicles.

Energy storage is the missing link for realizing the full potential of renewable energy. Storage guarantees that the energy produced by renewables is available at all times, even when the sun isn't shining or the wind isn't blowing. For example, storage can capture West Texas wind power at night when wind energy is most abundant and release that stored energy during the afternoon hours when demand for electricity is high.

But, to date, storage has been lagging in its availability and cost-competitiveness.

Worldwide, there were only 420 storage projects at the end of 2013 and only 34 megawatt hours’ worth of lithium ion battery projects built for the grid by the end of 2012. For comparison’s sake, there were 23 gigawatt hours' worth of lithium ion batteries made for consumer electronics, like cell phones, over the same period (1 gigawatt is equal to 1,000 megawatts).

Tesla's current costs for lithium ion batteries (supplied by Panasonic) are around $200 – $300 per kwh. If the factory could reduce those battery costs by 30 percent, prices could drop to $140 – $210 per kWh. Navigant analyst, Sam Jaffe estimates that battery packs will end up at around $180 per kWh. “They are definitely setting the bar for battery costs,” Jaffe said. “By 2020 every other battery manufacturer will have to get close to or beat the sub-$200 per kwh number that Tesla will be able to accomplish if they meet their goals.”

This is not to say that lithium ion batteries are the only option for energy storage- especially when it comes to renewables. A diverse portfolio of choices, including technologies like compressed air caverns and hydro pumping to sodium-sulfur batteries, will play an important role in the application of storage for both utility-scale and distributed generation energy storage.

Location, location, location

Tesla has not yet decided on a location for the GigaFactory, and many states are vying for the economic benefits of this development. The automaker is looking in Arizona, Nevada, New Mexico, and Texas, but at least two of these states (Texas and Arizona) are at odds with the company over its direct-to-customer selling strategy.

Because of long-standing state laws protecting and regulating auto dealerships (and the lobbying power of the Automobile Dealers Association), Tesla cannot sell directly to consumers in these states, or New Jersey, the latest state to effectively ban Tesla under their current business model.

Instead, Tesla can only showcase vehicles at “galleries" and state law prohibits employees from discussing the price or any logistical aspect of acquiring the car. Prospective buyers must order the cars from California, which are “delivered in a truck with no company markings, per Texas law, and customers even have to unwrap their new automobiles themselves, because the law prohibits Tesla’s in-state representatives from doing, saying or touching anything related to selling or delivering cars.”

Ironically in a letter attempting to woo Tesla to the Lone Star State, Rep. Jason Villalba stated, “I can attest to you that there is no better state in the Union to begin, grow and expand a new and thriving business such as Tesla Motors.” Tesla begs to differ.

According to Diarmuid O’Connell, Tesla’s Vice President of Business Development, “The issue of where we do business is in some ways inextricably linked to where we sell our cars. If Texas wants to reconsider its position on Tesla selling directly in Texas, it certainly couldn’t hurt. In an interview in April with The Texas Tribune, Tesla CEO Elon Musk went as far to call the state’s auto franchise laws “very un-Texan.”

Too late for a Texas GigaFactory?

During the last Texas legislative session, House Bill 3351 introduced rules to allow manufacturers of 100 percent electric cars to sell directly to consumers, but it did not pass. Arizona is also lobbying aggressively for the factory and lawmakers are pushing legislation that would allow Tesla to sell direct. And automakers in Ohio just struck a deal with Tesla easing the battle over its direct-to-consumer retailing model. Governor Perry has voiced support for HB 3351 and went so far as to admit in a recent Fox Business Today interview that Texas needs to revisit its “antiquated rules” prohibiting Tesla from selling electric vehicles in the state.

Perhaps Texas legislators should reevaluate their principles for the upcoming legislative session. Waiting till next year may be too late to sweeten the deal for a Texas GigaFactory, although it does appear that Texas leaders are making moves behind closed doors to secure this project.

The Texas Tribune reported that a secret meeting took place on Wednesday, where Tesla executives met with leaders in San Antonio, causing further speculation about the lone star state’s chance of landing this coveted project. Either way, Texas leaders should act fast or risk losing the opportunity for thousands of jobs in Texas. As Tesla breaks down many barriers with its innovative products and business models, it will be met with resistance. But the agility of the company to overcome the odds has already been proven.

This commentary originally appeared on our Texas Clean Air Matters blog.

By EDF Blogs

By: Victor A. Rojas, Senior Manager, Financial Policy

Source: 401(K) Flickr

The past two decades have seen a tremendous growth in our understanding of the climate change imperative and in the enormity of the challenge that confronts us. It has become clear that meeting climate change mitigation objectives will require the aggressive deployment of clean energy technologies, substantial amounts of capital, and creative methods of engaging that capital around these activities.

Transitioning to a low-carbon economy costs money (and lots of it). In fact, the International Energy Agency has estimated that $10.5 trillion will be required between 2010 and 2030 to fund this transition worldwide. Given the continuing challenges confronting global economies, the bulk of the capital needed to transition to this clean energy future will, by necessity, be private capital. As a result, creative financing solutions are essential to engaging and unleashing private, institutional capital, and accelerating the flow of those funds toward clean energy projects.

But the question of how to most effectively unlock the enormous amounts of capital necessary to pay for our transition to a low-carbon economy still remains.

Structure and rules are needed to engage private capital

In principle, there is no shortage of capital looking for suitable investment opportunities. The nearly $120 trillion in institutional funds currently under management is more than enough private capital to fund the transition to a low-carbon economy for the entire world. The challenge is how to construct these investment opportunities so that they quickly attract the volume of capital needed on a replicable basis. New asset classes New asset classes (themed, climate-related financial instruments, such as climate and green bonds) and creative financing mechanisms, such as property-assessed clean energy (PACE) financing, energy service agreements, and power purchase agreements, will allow issuers to borrow against future economic and environmental benefits. It will also allow for the critical investment necessary now to deliver those environmental benefits into the future.

Institutional capital and other private sources of finance have yet to show an understanding of the opportunities emerging in the clean energy sector. As a result, investors need a new tool and market infrastructure into which these funds can be comfortably deployed. There is also a critical lack of “standards.”  An agreed upon set of rules and criteria are essential to assure investors they are getting a fair return on their investment in clean energy. These rules should be designed to fully engage institutional capital, which will create a wider and more liquid market for these types of investments.

Creative financing solutions will fund the low carbon future

In my next few posts, I’ll talk about green bonds, climate bonds, and other finance mechanisms designed to engage and accelerate private, institutional capital flows into climate change initiatives. I will also talk about On-Bill Repayment and Property Assessed Clean Energy programs, EDF’s Investor Confidence Project, aggregation (the process whereby a number of a firm's smaller projects are combined and treated as an individual project), securitization (the process of pooling similar financial instruments, such as loans or bonds, into one security), and other efforts that are designed to engage private capital, create wider and more liquid secondary markets for climate debt, and help to finance critical clean energy initiatives. Stay tuned.

By Michael Panfil

Source: Carbon Cycle 2.0

Energy storage devices that collect electricity at times of abundance and deliver when demand is greatest are essential to upgrading our outdated power grid to a smarter, more flexible electricity system. New Jersey took a positive step toward implementing more energy storage earlier this year when its Office of Clean Energy released a proposal to allocate $2.5 million for incentives that would encourage more energy storage use. EDF recently took the opportunity to comment on the proposal, highlighting the ways in which energy storage can deliver added resiliency, environmental benefit, and flexibility.

Energy storage could be critical in next storm

Energy storage can help stabilize a power grid, which is particularly important in a place like New Jersey where Superstorm Sandy left a third of homes and businesses in the state without electricity, even five days after the disaster. Large-scale deployments of energy storage can reduce peak or high demand, when the dirtiest power plants are usually turned on, while smaller, community-scale energy storage, when paired with renewable energy like solar power, can keep the lights on when the electric grid at large goes down.

This last benefit could be particularly helpful in the event of another grid failure. Energy storage could prove a critical tool in hard-hit communities by keeping the power running in facilities like hospitals and shelters.

EDF’s recommendations for New Jersey’s energy storage program

EDF recommended New Jersey’s energy storage initiative include effective monitoring and reporting, which ensures that positive steps accomplished by this program are not lost or isolated. “Given that the state is engaged in a number of clean and resilient energy initiatives, a monitoring and reporting component could be critical in communicating program benefits, challenges, and design features to the public, interested parties, and other state agencies,” EDF said in its comments.

EDF also asked New Jersey to release more information on the program’s technical criteria in three areas:

1. Maturity and proven success of the technology,
2. Commercial availability and track record of equipment, and
3. Performance and reliability of the proposed energy storage system relative to cost.

EDF is continuing to work with New Jersey on these issues to help bring about the right energy storage solutions in the state.

EDF is advocating for the right investments in New Jersey’s energy sector to make the state’s power grid more resilient, stable, and clean. The proposal is a step in that direction, providing one tool in creating a better, smarter, and stronger energy system in the state.

By Brad Copithorne

Yesterday, my colleague Scott Hofmeister described an insurance pool that California has introduced to help communities integrate Property Assessed Clean Energy (“PACE”), a unique program that allows homeowners to finance money-saving clean energy retrofits through their property tax bill. These programs are popular in Sonoma, Orange, San Diego, Riverside, San Bernardino, Kern, and Fresno Counties, and we expect them to spread rapidly throughout the state.

Home Energy Renovation Opportunity (HERO), a residential PACE program run by Renovate America that has partnered with the Western Riverside Council of Governments, has funded over $180 million of clean energy retrofit projects in a little more than two years of operation. These investments are expected to save homeowners more than 2 billion kilowatt-hours, reduce consumers’ utility bills by almost $500 million and avoid more than 1.4 million metric tons of CO2 emissions, or the equivalent of removing almost 300,000 passenger vehicles from the road for a full year. And notably, the HERO program is entirely funded by private investors.

If the whole state of California embraced PACE at the same rate as Riverside County, residential PACE could generate up to $3.5 billion of private investment. That could create more than a few high quality local jobs.

Last week, about $100 million of the HERO financings were securitized and sold to investors by Deutsche Bank. The terms of the transactions indicate the incredible power of the PACE structure and potential of these clean energy investments. Despite all of the financings coming from a single county, 20 year maturities for the underlying loans, and an overcollateralization of only 3%, the rating agency provided a AA rating, the second highest possible, for these financial assets. For comparison, geographically diversified pools of unsecured 10-12 year energy efficiency loans may require overcollateralization of 20+% to achieve BBB ratings.

The transaction was priced last week at a yield of 4.75%  (11 year SWAP rates + 180 bps) and some market experts expect that future transactions may capture even lower yields as investors become comfortable with PACE.

HERO is setting the pace for clean energy financing. In the coming months, EDF will be working with HERO and other PACE programs to ensure continued success in California, with hopes to expand this proven opportunity to additional states. “We are fortunate to be working with EDF and local governments throughout California to enable thousands of homeowners to lower their utility bills and collectively save millions of dollars,” commented JP McNeill, CEO of Renovate America, “this is a great example of what happens when the public sector and the private sector work together to deliver a solution for homeowners in the U.S.”

This commentary originally appeared on our California Dream 2.0 blog. 

By EDF Blogs

By: Matt Golden, Senior Energy Finance Consultant

Each year the Climate Change Business Journal (CCBJ) awards businesses and non-profits for their outstanding work in the climate and environment industry. This year, we are thrilled to announce that EDF’s own Investor Confidence Project (ICP) was named a winner of CCBJ’s Business Achievement Award in the category of Finance. Winners of the 18 categories – ranging from solar and wind power to transportation and energy efficiency – were recognized this month at an Environmental Industry Summit in San Diego.

The Investor Confidence Project received recognition for its efforts to help create a market for investor-ready energy efficiency projects. From the CCBJ award website: “ICP is moving the energy efficiency industry closer to the Holy Grail of securitization, in which energy efficiency projects can be valued based on consistent parameters with little project-specific analysis and vetting-processes that ratchet up soft costs quickly.”

Investors need a way to manage risk, and they abhor uncertainty. The fact that historically every energy efficiency project is unique, makes the process of underwriting performance risk very challenging and expensive. ICP creates a standardized class of projects assembling existing technical standards into a set of Energy Performance Protocols that outline best practices, existing standards, and documentation that can enable financing or managing of energy performance risk.

As with all red carpet award winners, our list of “thank yous” is long – so instead check out our amazing list of supporting project allies. It was the contributions from our many industry and public sector stakeholders that ensure the ICP Protocols strike the right balance and can help remove long standing barriers to large-scale investment in energy efficiency. EDF is honored and thrilled to be a recipient of this prestigious award, but as the saying goes, “it takes a village” to accomplish true success.

By Kate Zerrenner

Source: UN Water

The theme of this year’s World Water Day on March 22nd is the “energy-water nexus,” and the timing couldn't be better. According to the United Nations (who first established World Water Day in 1993):

• 780 million people worldwide lack access to safe drinking water.
• 13 billion people worldwide lack access to electricity.
• 90 percent of the power generation in the world comes from water-intensive fossil fuels.
• As countries progress and develop, there is an increased risk of conflict between power generators, other water users, and environmental concerns.
• By 2035, global water withdrawals for energy are predicted to increase by 20 percent, and water consumption for energy is expected to increase by 85 percent.

For the past year, I’ve been trying to bring awareness to the connection between energy and water in Texas, but this issue is much bigger than a single state. Energy and water are both basic components of life and economic progress, and they are also inextricably linked. Energy is used to secure, deliver, treat, and distribute water, while water is used (and often degraded) to develop, process and deliver energy.

For 2014, the UN will highlight the inequality that results from the lack of coordination between the energy and water sectors.

The UN is interested in the energy-water nexus for the same reason that the World Bank is interested in it: the inequality of access to basic services, such as safe-drinking water and electricity, is unacceptable and indicative of extreme poverty across the globe. By coordinating policies and programs between the two sectors, energy and water can innovate together and improve people’s lives across the globe. Through this attention, it is hoped that these two sectors will enhance energy security and sustainable water use.

Source: Argonne National Library

As population grows, energy and water must work together

Of particular concern is that as the global population grows, so will the demand for energy and water. As economic progress depends on the growth of these two sectors, it is becoming increasingly important to address the nexus between the energy and water in a holistic way. Scarcity of both or either resource threatens to undermine successful economic development. So, how do we manage our resources to ensure that they are available and sustainable?

Despite the inherent connection between the two sectors, energy and water planners routinely make decisions that impact one another without adequately understanding the scientific or policy complexities of the other sector. This miscommunication often hides joint opportunities for conservation to the detriment of budgets, efficiency, the environment, and public health.

Real solutions to real problems

A holistic outlook that integrates behavior, technology, and conservation is what’s needed to help set the world on a sustainable path. Greater efficiencies through an integrated approach to our energy and water constraints mean that we are protecting our resources and help to establish financial stability in these sectors.

So, while the energy-water nexus seems daunting, there are solutions to help mitigate or solve these challenges:

• Joint planning: With cooperation, energy and water sectors can successfully reduce the reliance on thirsty fossil-fuel electricity and bolster the supply of water. Better understanding of each other’s sectors will enhance coordination and better investment in long-term solutions to preserve our resources.
• Public education: Education about the energy-water nexus (saving water saves energy and vice versa) is needed, and people need to know that their individual choices do play an important role in solving this issue—choices in which foods they buy, which cars they drive, and more.
• Low-water energy resources: Support the development of solar and wind energy, which consume little to no water and generate negligible carbon emissions.
• Preservation: Recognize that our planet’s diverse ecosystems are part of the equation. Thoughtful management of the trade-offs between the needs of the energy and water sectors, and the plants and animals we share this planet with, is critical if we are going to ensure that short-term gains for economic development do not undermine the ecosystem that’s so important for future resilience and sustainability.
• Fair value pricing: Appropriately price energy and water resources to both provide sufficient revenues for industry players and promote conservation and efficiency through price signals.

The importance of the energy-water nexus is coming to the forefront as more people across the globe live in places that face constrained access to both of these important resources. As climate change continues to complicate the energy-water equation —for example, higher temperatures lead to increased demand for air conditioning, which stresses the electric grid and requires additional water for cooling—these challenges will intensify. That’s why the UN’s choice to feature the energy-water nexus as the theme for this year’s World Water Day could not come at a better time. The call to action is now, and our policies and investments must reflect the importance of this global priority.

If you interested in learning more about World Water Day, you can download the newest report here, to be released on March 22nd.

This commentary originally appeared on our EDF Voices blog.

By Rory Christian

Source: The White House

Today, the White House is hosting an event highlighting its commitment to boosting resilience among communities most vulnerable to the effects of climate change. EDF commends the White House for taking steps to make climate change preparedness and resilience a national priority, especially since this has mostly been a regional issue dealt with in areas affected by severe weather events, such as New York, New Jersey, and Connecticut.

At the event, federal agencies, businesses, researchers, and academia, among others will discuss plans to use data-driven technologies and leverage freely available government data to develop products and services that will help the country better prepare for the effects of climate change. The event will showcase insights gathered from scientific data as well as cutting-edge technologies built by American innovators that are essential to better understanding and managing the risks posed by climate change.

Among those in attendance will be White House counselor John Podesta, who is advising the Obama administration on taking a more aggressive posture on environmental policies; Dr. Ellen Stofan, NASA Chief Scientist; and Rebecca Moore, founder of Google Earth Engine.

Hurricane Sandy underscores vulnerable energy infrastructure

Hurricane Sandy’s devastation of the country’s northeastern coast in late 2012 drove home the point that federal and state governments can no longer just mitigate climate change by reducing carbon pollution; they must actively engage in preparing for severe weather events that are becoming increasingly frequent as a result of climate change.

Sandy, which destroyed homes and businesses and knocked out electricity to millions for weeks, shined a much-needed spotlight on the vulnerability of our century-old energy infrastructure, placing the issue front and center for the region’s state and local leaders, electric utility companies, and regulators.

A diverse coalition of climate leaders is essential

Quick to respond to the damage caused by Sandy, the federal government pledged over $60 billion in federal funds to support recovery efforts. EDF is pleased that the Obama administration is reinforcing its commitment to mitigating the effects of climate change on a national level by convening today’s meeting. A diverse coalition of top private-sector technology companies, scientists, and other climate experts is essential if we are to harness the latest climate science and technologies to boost resilience in an era of increasingly frequent extreme weather events. This cross-section of dynamic leaders will help drive us toward the most creative, innovative energy solutions.

EDF’s California team is also launching their own climate data-driven resilience project today in support of the White House event: the newest version of the “Los Angeles Solar and Efficiency Report (LASER),” first released in November of last year. This innovative climate mapping tool is designed to help local leaders identify opportunities to invest in clean energy jobs and strengthen climate resiliency in vulnerable communities.

Ensuring the adoption of technologies and policies that move the U.S. power grid into the 21st century, making it more resilient, flexible, and smarter, can simultaneously accomplish today’s goals while preparing for future challenges.

By Scott Hofmeister

When it comes to protecting the environment and fighting climate change, California has always been a first mover.

Now the state is boldly acting to unleash a new market that saves energy, cuts pollution, and drastically increases clean energy investment for California’s residents.

Last week, California approved a $10 million reserve that will revive the Property Assessed Clean Energy (PACE) program for residential customers.

PACE allows customers to take advantage of energy saving upgrades to their home with no money down. Customers simply use a portion of their savings to pay off the investment over time through their property tax bill. Financing can be entirely provided by private lenders at no cost to taxpayers.

Since its first use at a San Francisco office building in 2012, PACE has been a resounding success in the commercial sector. In fact, the commercial markets have quickly taken to PACE and continue to set new deal-size records.

The residential market started out equally strong, but cooled off when the Federal Housing Finance Agency (FHFA) raised concerns that PACE financing could be potentially hurting home mortgage holders like Fannie Mae and Freddie Mac. The FHFA announcement effectively stalled residential PACE, as local communities and homeowners were concerned about potential impacts to the mortgage markets.

Still, a few California programs have decided to offer residential PACE and have barely been able to keep up with demand, proving that the program can thrive for homeowners.

Sonoma County’s residential program has financed upgrades for nearly 2,000 homes since it began in 2009. Since December 2011, the Western Riverside Council of Governments has offered a residential PACE program to homeowners called HERO Financing. In that time, $134 million has been invested in clean energy upgrades for homeowners in a region of Southern California with a population of 1.45 million people.

At that rate, almost $30 billion of clean energy retrofits could be financed if a similar residential PACE program were adopted nationwide.

California’s latest proposal, ushered in by Governor Brown, will harness the success of PACE and its untapped potential, while easing the concerns of the FHFA. The new reserve will pay mortgage holders (like Fannie and Freddie) for specific losses they incur due to a PACE financing, so they don’t have to worry about losing money because of PACE.  We are hopeful the FHFA will bless this approach so that more states can attract private, clean energy investments at no cost to taxpayers.

Ultimately, California is poised to see a massive increase in residential energy efficiency and investment through PACE, all while helping residents save money, use cleaner energy, and protect the environment, too.

This commentary originally appeared on our California Dream 2.0 blog.

By Rory Christian

Source: NASA Earth Observatory

Last month, I had the pleasure of moderating a panel called “Utilities 2.0: The Role of Distributed Generation and Demand Response in Evolving Utility Business Models.” The topic may sound esoteric, but to the more than sixty people in attendance, and at least fifty more watching online, the event, which was sponsored by clean energy networking group Agrion, offered insight into how these options will in a not-too-distant future revolutionize the way all of us consume electricity.

The energy industry is abuzz with talk of how distributed generation, which enables consumers to draw power from on-site sources, such as rooftop solar, and demand response, which rewards customers who use less electricity during times of peak demand, are transforming the electric utility industry. A once-in-a-generation paradigm shift is already in motion, and exactly how it will play out is anyone’s guess.

The Agrion panel wasn’t the only crowded event I’ve recently attended where the need for new utility business models was the topic of lively debate. Earlier this month, I joined representatives from utility companies and the New York Public Service Commission as well as other industry stakeholders at a NYU symposium on “The Utility Industry of the Future.” Both of these events came hot on the heels of the Commission’s Order last month requiring Con Edison to support more clean, distributed generation and sophisticated electricity pricing structures based on the time electricity is used.

Slow Growth in Electricity Demand

As options for clean, distributed energy resources and demand response decrease in price, they are becoming increasingly attractive to customers. Though there are many differing views regarding the scope and scale of the problem, one thing is clear: the way utilities do business must change. Utilities are monopolies, in that they have an exclusive right to a geographic area as well as a predetermined rate of return on the condition that electricity is provided on a reliable and affordable basis. This means utilities are incentivized to sell as much electricity as possible. This model has worked well with few changes for close to a century, but developments in technology and customer expectations require that the existing model be evaluated in a new light.

Technological advancements have occurred at a pace that regulatory changes have been unable to match. According to the U.S. Energy Information Administration, “[E]lectricity demand growth remains relatively slow, as increasing demand for electricity services is offset by efficiency gains from new appliance standards and investments in energy-efficient equipment.” Energy efficiency improvements have slowed the annual growth of electricity demand to less than one percent in the first decade of this century. Given this anemic level of growth, the potential for wide-scale adoption of clean, distributed energy resources and demand response could significantly alter the economics of utilities.

Banner Year for Solar

Solar, in particular, had a banner year in 2013. Not only have the cost of solar panels dropped by 75% since 2008, but the number of solar installations increased by 41% throughout 2012 (nearly fifteen times the amount installed in 2008). Last year, according to the Solar Energy Industries Association, solar was the “second-largest source of new electricity generating capacity in the U.S., exceeded only by natural gas.”

Many questions were raised during these recent conferences. What investments should regulators attempt to incentivize? What should be the role of the utility in managing distributed energy resources? Should utilities be compensated for investments that are no longer creating returns? While there are many questions, we have, as of yet, few answers. We can, however, be sure that the electrical grid will play a different role in the near future than it does today.

By Lauren Navarro

Last week, the California Public Utility Commission (CPUC) finalized an important decision for Southern California’s energy supply following the closure of the San Onofre Nuclear Generating Station (SONGS). The plan emphasizes increased reliance on clean energy in this part of the state – an important step towards a fully realized low-carbon future.

The decision authorized San Diego Gas and Electric and Southern California Edison to procure at least 550 megawatts (MW) of ‘preferred resources,’ which include renewable energy, demand response (a tool that’s used by utilities to reward people who use less electricity during times of “critical,” peak electricity demand), energy efficiency, at least 50 MW of energy storage, and up to 1,000 MW of these resources altogether.

That’s a major step forward, as utilities across the country traditionally rely on large fossil fuel plants to meet regional demand.

However, the CPUC also authorized the procurement of 1,000 MW of power from natural gas generation, demonstrating that Southern California still has a ways to go to reach its clean energy potential.

In the proposed decision last week, the CPUC recognized the need for a diverse and flexible portfolio of energy tools and resources. By emphasizing the potential of demand-side energy resources to meet Southern California’s reliability needs, the CPUC has essentially launched a new era in the state’s transition to a cleaner, more resilient energy future.

The CPUC should be commended for including ‘preferred resources’ (such as renewable power and energy efficiency) in its decision, and for recognizing the important role demand response resources can play to meet California’s energy needs following the loss of SONGS. Going forward, the CPUC and the utilities should go one step further by seeking to expand and maximize the role of demand response policies – which rely on people, not power plants, to meet electrical demand – including voluntary time-of-use (TOU) pricing in securing the state’s energy future.

Time of use rates, for example, put power in the hands of the customers to determine whether power plants are needed by pricing electricity based on the time of day it is used.  By linking awareness of the cost of energy with smart displays and thermostats, these rates can make a big difference in the need for power plants – and lower your bills, one power plant at a time.  As EDF described in our comments on the proposed decision, if 20 percent of Southern California Edison’s ratepayers adopted voluntary TOU, peak demand would fall by almost 630 megawatts (“MW”), about a third of SONGS capacity.

In fact, if half of Southern California Edison’s residential ratepayers adopted a voluntary TOU electricity pricing structure, this could replace two-thirds of the SONGS’ lost capacity, saving $357 million per year. By including increasing demand response resources, such as TOU, in the CPUC’s long-term plans, the state can avoid being locked into environmentally risky – and expensive – fossil fuels.

By replacing a chunk of capacity from SONGS with renewable energy, energy storage, demand response, and other smart energy resources, the CPUC highlights an important priority for the state in the coming decades. This should be the beginning, not the end, of Southern California’s push to adopt preferred resources and diversify its energy mix in order to usher in a clean, sustainable, and healthy future.

This commentary originally appeared on our California Dream 2.0 blog.

By EDF Blogs

By: Diane Munns, Senior Director, Smart Power Collaboration

Most people do not typically associate Minnesota with abundant sunshine, but after a landmark decision by the Minnesota Public Utilities Commission (PUC) yesterday the sun is definitely shining on this snow-swept state. The PUC established the first statewide program to fairly value investments in rooftop solar electricity generation. I listened to a portion of the public meeting and oral arguments, which lasted several hours and demonstrated much thoughtful work. Through a refreshingly civil display of democracy and Midwestern hard work, state officials, utilities, and the solar and environmental community were able to hash out a method for valuing solar resources that are key to a clean energy future.

Yesterday’s decision dealt with the ongoing debate over how much solar power is worth to a utility, its ratepayers, society, and the environment. The PUC did not establish a set price for a statewide solar tariff, but rather the method to be followed when utilities calculate how much to pay for electricity generated by rooftop solar systems. Minnesota utilities will now have the option to file tariffs using this method instead of net metering, the more common but controversial and less scalable cousin of the “value-of-solar” (VOS) tariff.

During the proceedings, there was discussion and disagreement among the parties over the value of avoiding greenhouse gas pollution attributable to solar generation. The debate mostly centered on whether the VOS tariff model should include the state-specific or federally established value (i.e., the ‘social cost of carbon’). But the Commission ultimately agreed to go with the current value calculated by the Obama administration and the Environmental Protection Agency.

The Commission’s action, prompted by a Minnesota statute passed last year, is the culmination of an admirable process. A proposal from the Department of Commerce was vetted through a broad stakeholder process with opportunity for input.

Net metering and the value of solar have become highly emotional, politically-charged issues in some states. Minnesota’s initiative was an opportunity to develop a valuation method in a fact-based, collaborative process. This process and the state’s proactive approach to the issue sets Minnesota apart.

With 43 states already operating net metering programs, Minnesota’s decision could signal the next step in solar tariff structures. The VOS tariff concept has been explored in a few other places, including Austin, Texas, where a VOS tariff has been in place since 2012. But Minnesota is the first state to apply the concept to all utilities statewide. There is no doubt that other states considering a solar tariff will be looking to the Minnesota methodology as a model in the coming years. While this decision is only the beginning, it is a positive step forward in that it acknowledges the ever-increasing role that solar can play in the resource mix and advances the thinking on the value it provides.

By David Lyon

The Environmental Protection Agency recently released its draft inventory of annual U.S. greenhouse gas emissions. Reporting 2012 data, the inventory estimates methane emissions coming from natural gas and petroleum systems at around 7.6 million metric tons – that’s enough natural gas to provide energy to over 7 million homes annually. This new estimate when compared with last year’s report, which estimates emissions for the 2011 calendar year, shows overall methane emissions from natural gas and petroleum systems are 1.2 percent lower. Although this seems like good news, the new data is no cause for complacency, as it’s important to understand the cause of the changes which requires closer examination.

The draft inventory introduces some new methodological changes that reduce estimated emissions from previous years. The primary change was driven by the way EPA estimates emissions from gas well completions and workovers, the steps that follow hydraulic fracturing and clear liquids and sand from the well before production begins.

EPA’s previous calculation method first estimated the potential emissions from all well completions and workovers, assuming no emission controls were used, and then calculated actual emissions by subtracting estimated reductions resulting from compliance with state air regulations and from companies voluntarily participating in EPA’s Natural Gas STAR Program. The new method evolves the calculation to improve accuracy, using data from EPA’s mandatory GHG Reporting Program, to directly estimate emissions from wells that do not control emissions and those that utilize some combination of control technologies (which will become mandatory in 2015 for most natural gas wells). Although the Reporting Program data better accounts for emission reductions from individual wells, EPA’s method for determining the number of overall well completions likely underrepresents total emissions from this source.

Co-producing wells: an overlooked emission source?

Another key issue is the way EPA estimates emissions from completions of oil-producing wells. Hydraulic fracturing is increasingly being used to develop new shale oil resources. Often times, depending on the geology, shale resources can either be explored for oil or natural gas. Given today’s fuel prices, market forces are driving more onshore shale oil development. However, the inventory continues to base its emission estimates for these oil wells on data from the mid ‘90s pertaining to conventional, non-fractured oil wells. Several data sources–including the GHG Reporting Program, the UT Study, and the Stanford Novim study– suggest that hydraulically fractured oil well completions have emissions more than a 100 times higher than the current estimate for conventional oil wells.

Fortunately, the same techniques that will soon be required to control completion emissions from natural gas wells can also be applied to many hydraulically fractured oil-producing wells (which we call “co-producing” wells, because they frequently produce both gas and liquids). In a white paper, we summarize the data we have collected on emissions from oil-producing well completions, and what they tell us about the potential to cost-effectively reduce emissions from these wells. (Further reading: EDF oil well completion analysis, memorandum on oil and gas well completions, analysis of effectiveness of initial production costs,  analysis on co-producing wells)

Good data, better outcomes

EPA’s Greenhouse Gas Inventory is a great tool for improving our understanding of the impact human activity has on climate change, and it underscores that there is an urgent need to mitigate methane emissions from the oil and gas sector. At the same time, it is important that the inventory appropriately characterizes all of the significant sources of methane from this sector. Accordingly, EDF has submitted comments asking EPA to include estimated emissions from oil well completions with hydraulic fracturing based on recent data such as the GHG Reporting Program, the UT study, and our analysis of well production data. Because drilling activity has shifted more and more towards oil-producing formations, we estimate that emissions from oil well completions are similar in scale to gas well completions.

Figure 1. US Petroleum and Other Liquids Supply, 1970-2040 (Source: EIA)

It’s also critical that EPA regulations addressing emissions from the oil and gas sector keep up with our improved understanding of the methane inventory. Consistent with our findings on emissions from co-producing well completions, we’ve encouraged EPA to extend proven emission controls for well completions to oil and condensate-producing wells. These wells are largely unaddressed under EPA’s current New Source Performance Standards for the oil and gas sector, which only require “green completions” for wells that are drilled for the purpose of producing natural gas (read the UT study FAQ for more detail).

Reducing methane emissions from the oil and gas sector is critical to protecting human health and the environment from climate change, and deep reductions in methane emissions are necessary both to slow the near-term rate of climate change and to ensure that the use of natural gas in lieu of other fossil fuels yields net climate benefits.  Data and cost-effective technologies needed to secure these urgently-needed emission reductions are available and it is imperative that we deploy them swiftly.

We’ve submitted comments to EPA to provide our suggestions and hope others will join us, as EPA is accepting comments on the draft inventory until March 26, 2014.

Tomás Carbonell and Peter Zalzal contributed to this post.

 

By Dick Munson

In a victory for Illinois residents and the environment, Commonwealth Edison Company (ComEd) today formally proposed to the Illinois Commerce Commission an accelerated timetable for completing its deployment of four million smart meters. ComEd began installing smart meters last fall as part of the Energy Infrastructure and Modernization Act of 2011. With this proposal, the Illinois utility will complete its meter installation almost five years earlier than planned.

Modern, smart electricity meters are a key component of the smart grid. These devices help eliminate huge waste in the energy system, reduce overall and peak energy demand, and spur the adoption of clean, low-carbon energy resources, including wind and solar power. By enabling two-way, real-time communication, smart meters give every day energy users, small businesses, manufacturers, and farmers (and the electricity providers that serve them) the information they need to control their own energy use and reduce their electricity costs.

“Faster deployment of the smart grid makes economic sense for Illinois consumers,” said David Kolata, Citizen’s Utility Board’s (CUB) Executive Director. “Not only will it lower overall implementation costs through economies of scale, but it will also allow consumers to more quickly access smart grid benefits, including improved reliability, better energy efficiency, and new, money-saving power pricing programs.”

Critical work, however, lies ahead. For instance, EDF has negotiated with ComEd a set of 20 metrics that will be used to evaluate the consumer, economic, and environmental benefits associated with the smart grid. This will help ensure that the deployment of this new technology benefits more than the utility’s bottom line. As the saying goes, what gets measured gets done.

We also are working to set standards for providing customers with their energy-use data as close to real-time as possible so that they can become more active participants in their own energy consumption. Additionally, EDF and our Illinois partners are pushing to advance dynamic pricing adoption, through more sophisticated electricity pricing structures based on the time electricity is used. Such pricing alternatives could help Illinois customers reduce their energy use during periods when costs – and environmental impacts – are high.

“New technologies and business models are emerging every day to enable residents to conserve electricity, save money, and reduce pollution,” said Andrew Barbeau, president of The Accelerate Group, who is working with EDF in Illinois to advance effective smart grid implementation. “Achieving a critical mass of customers with meters sooner will enable Illinois to be a leader of the pack in implementing solutions for smart and connected homes and communities.”

The speed-up still needs to be approved by the Illinois Commerce Commission, but it is an important first step in what EDF sees as a path toward a smarter, cleaner, and healthier energy system for all Illinoisans. Stay tuned.